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Making Money Takes Bottle (City AM column)

by Gary Boom (Managing Director)

For years while I worked in the City I was buying serious wine from leading merchants.  They were all too keen to call me to offer me wine to buy, but if I wanted to sell, the blinds came down. It was clear that my collection was increasing in value but it was impossible to get a clear and accurate valuation – and furthermore, then equally unachievable to sell at a price that was fair.

Having worked closely with Lord Spencer of Alresford as a Director at ICAP, bringing transparency and liquidity to previously opaque markets, I felt certain the same could be done with fine wine. I started BI in 1997 with exactly this aim.

There is no doubt that the long-run performance of the fine wine market is an impressive one. With a compound annual growth rate of over 10% over the last 30 years it compares favourably with both conventional and alternative investments.

So whilst there was a clear record of attractive returns, there were several aspects of fine wine investment which had traditionally prevented it from achieving mainstream appeal: accessibility, transparency and a true two-way market.

Launched in 2009, BI’s LiveTrade platform was the world’s first dealing platform for fine wine and remains the only facility open to private collectors and investors to offer live, guaranteed buying and selling prices for over 500 of the world’s top wines. With almost £1bn worth of wine traded since opening, LiveTrade has established itself as the key tool for investors in fine wine.

So if you’re considering joining the increasingly large group of investors moving funds into wine as an alternative investment, it’s worth looking at the benefits which investing in fine wine can bring.

A performing asset: strong long-run returns speak to the proven potential for capital appreciation with naturally decreasing supply post release meeting increasingly mature demand from international markets and ever broader High Net Worth focus.

Low correlation with other asset classes: the limited relationship between wine and other assets, including during disruptive market events, means that it is a compelling addition to any diversified portfolio

Inflation hedge: as a tangible asset with intrinsic worth wine can act as a distinct commodity-like hedge.

Tax efficient: investing in wine can have significant CGT advantages (though independent advice on this front should be sought).

Low trading costs: the tight trading spreads on our LiveTrade platform move fine wine towards the territory of developed-market financial assets

Over the coming weeks we’ll be looking in more detail at the fine wine market, exploring the best investment opportunities across Bordeaux, Champagne, Burgundy, and from around the world. The top 5 performing wines this year in terms of returns, illustrated on the graph below, indicate the breadth of wines and styles that have real investment potential.

We’ve always said making money takes bottle. Now we’ll help show you which one.

Having followed COVID-19 Government advice, we have temporarily closed our London office until further notice, we are however operating as normal. Click here to read more